Massachusetts tax collections jump by $600 million from prior year

BOSTON — Tax collections for the recent fiscal year in Massachusetts rose $107 million more than projected and about $600 million more than the prior year, spurred by a growing economy.

State Revenue Commissioner Amy Pitter said the state collected $21.117 billion in taxes for the fiscal year that ended June 30, an increase of 2.9 percent from the prior year.

Amy Pitter

"The increase of $600 million in collections reflects a Massachusetts economy that has grown over the past 12 months,” Pitter said in a statement.

Jay Gonzalez, secretary of administration and finance, said he was pleasantly surprised to see the tax collections for the recent fiscal year were above the estimate. Gonzalez said the collections for June allowed the state to exceed the estimate for the year.

"That's good news," Gonzalez said.

Michael J. Widmer, president of the Massachusetts Taxpayers Foundation, said the collections signal that economic growth for this year is unlikely to be strong enough to trigger another tiny cut in the state's 5.25 percent income tax.

Under a state law, the income tax could drop to 5.20 percent on Jan. 1 if the state passed a series of thresholds for measuring economic growth. The income tax fell by 0.05 percentage points on the first day of this year after barely clearing a final hurdle for determining growth.

About $370 million of the recent fiscal year's collections were one-time settlements and judgments exceeding $10 million. Widmer said those one-time settlements are unlikely to be repeated for the fiscal year that began July 1.

That means it could be difficult for the state to reach its forecast of $833 million increase in tax collections, or almost 4 percent, for this fiscal year, according to Widmer.

Gonzalez said he still feels the tax collection estimate for this fiscal year of $21.950 billion is responsible.

Gonzalez also suggested it is too early to determine if another small cut in the income tax will occur on Jan. 1.

Pitter said there were increases in income, sales, corporate and business taxes.

Income tax collections came in below projections, while sales, corporate and business collections were more than forecast for the fiscal year that just ended.

June was a strong month to end the fiscal year. Tax collections for June were $2.296 billion, up $144 million, or 6.7 percent from June of last year and $120 million more than projections, the revenue department reported.

For the fiscal year as a whole, personal income tax collection totaled $11.914 billion, an increase of $338 million or 2.9 percent, but $189 million below benchmark, the revenue department said in a release.

Collections of the 6.25 percent sales tax totaled $5.059 billion for the fiscal year, up $155 million, or 3.2 percent, and $64 million over benchmark.

Corporate and business tax collections for the fiscal year totaled $2.320 billion, up $92 million, or 4.1 percent, $146 million over benchmark.

Tax collections for the recent fiscal year were not as strong as the fiscal year that ended June 30, 2011. Those tax collections rose $723 million more than projected and nearly $2 billion more than the prior year.